Economic recovery in South West held back by skills shortages and recruitment difficulties  

4 July 2021

Despite welcome news of a rebound in business activity, confidence and cashflow, albeit from an historically low base, the speed and extent of the South West’s economic recovery is threatened by labour market tightness and recruitment issues, according to the latest British Chambers of Commerce Quarterly Economic Survey.

Regionally, the British Chambers of Commerce South West (BCCSW) is seeing issues for businesses trying to recruit at all skill levels. From the highly skilled manual and technical roles, where two thirds are experiencing difficulties finding the right staff, to the professional and managerial personnel that over half of services-based firms are struggling to hire. The problems pervade further down, with almost a third of businesses having difficulties filling semi or unskilled positions.

While there is no easy fix to the variety of issues the region’s labour market is struggling with, BCCSW warns that real solutions are required to address both the current and long-term shortages of talent and people that businesses need to grow out of the recession.

Short-term interventions such as improving the operational delivery of the Government’s much hyped ‘Kickstart’ programme; a review of the visa system – especially the earnings thresholds for bringing back workers from overseas in the near term with the skills that businesses need; and considering changes to the Universal Credit requirement to be looking for work (which was suspended early on in the pandemic) could all play a part at least for the lower skilled or seasonal roles across the South West.

The longer-term skills agenda is also key. Businesses are calling for the government to set up and properly communicate a comprehensive and mature roadmap to upskill our residents and communities to adapt to the long-term employment needs of our economy. The Government’s Skills and Post 16 Education Bill will have an important role, as will the announcement of the Local Skills Improvement Plans (LSIPs).

British Chambers of Commerce South West’s Alistair Tudor, Operations Manager at Somerset Chamber of Commerce, said: “The sudden resurgence of business activity has meant that businesses who need to recruit are confronted by a tight labour market, especially for skilled staff.

“The double impact of Brexit and COVID-19 has had major impacts on the location and availability of the workforce in the South West, with a falling but still significant proportion of our residents on either furlough or Universal Credit.

“We cannot let the talent and potential of our communities go to waste, or for that matter put at risk our economic recovery, due to tricky but ultimately solvable labour market challenges.”

Somerset Chamber member, Marston Foods, is based near Frome and makes high-quality frozen desserts. The company said recruitment difficulties were already pushing up prices across the entire supply chain and urgent short-term action was needed to allow more skilled workers into the UK.

Leona McDonald, Marston Foods’ Commercial Director, said: “As a high-end food manufacturer, we require workers with some level of skill to make our desserts. It takes time and money to train people to the standards that we require, and so once we have people we like to keep them, but we have lost a lot of our loyal European workforce and there seems to be very few local people to train.

“We live in a disparately populated area, with low unemployment and a rather lapse public transport system. There are applicants, but due to the remit with regards to benefit claims, a majority never take the application process any further and so we waste time chasing and calling to no avail. Offering higher pay and other benefits – which we are doing – is only part of the solution to a much wider issue.

“The shortage is already causing price increases and shortages across the whole supply chain making this is everyone’s problem. Pretty soon, if nothing is done, consumers will not be able to get what they need, like or want and if they do, the price is going to have to increase as suppliers such as ourselves cannot keep being squeezed and still survive.

“We need some short-term action for example, an extension to the T5 skilled workers list to include manufacturing, and a plan to enable labour availability for the short, medium and long term, not just the long via the long-term plans such as the apprenticeship scheme.

“In summary we have jobs here in Frome. If you want to work, come to work. We offer competitive rates of pay, a fun environment and a real sense of pride in what we do.”